## Facts

- Robert W. Goree, Jr. died intestate on October 7, 1988, survived by his wife, Lisa Callahan Goree, and three minor children.
- Under Alabama intestacy law, the wife and the children were the only heirs; the wife would receive one-half of the estate and the other half would be divided among the children.
- The estate was worth several million dollars; its principal asset was 232,939 shares of Russell Corporation common stock.
- For federal estate-tax purposes, property passing to the surviving spouse generally qualified for the marital deduction under I.R.C. § 2056, but property passing to the children did not.
- To reduce estate tax, the wife petitioned the Alabama probate court for authority to execute partial disclaimers on behalf of each minor child, aimed at disclaiming the portion of each child’s inheritance above an amount designed to avoid estate tax (described in the record as roughly the tax-free amount available to nonspousal transferees).
- The probate court appointed a guardian ad litem to represent the children; the guardian initially opposed the disclaimers but later withdrew his opposition after testimony that the wife would use the disclaimed amounts to provide for the children and that the children were expected to receive other family wealth in the future.
- The probate court approved the partial disclaimers as being in the children’s best interests.
- The IRS issued a notice of deficiency (approximately $376,708), refusing to treat the children’s partial disclaimers as qualified disclaimers under I.R.C. § 2518 and, as a result, limiting the marital deduction.
- The IRS also disputed the estate’s attempt to increase its credit for tax on prior transfers under I.R.C. § 2013 relating to property previously taxed in the grandfather’s estate.
- The estate petitioned the United States Tax Court for redetermination.

## Issues

1. Whether the partial disclaimers executed on behalf of the decedent’s minor children satisfied the requirements for qualified disclaimers under I.R.C. § 2518(b).
2. If the disclaimers were not qualified, whether the Commissioner correctly computed the surviving spouse’s interest for purposes of the marital deduction under I.R.C. § 2056.
3. Whether the estate was entitled to a larger credit for tax on prior transfers under I.R.C. § 2013 for federal estate tax paid by the estate of the decedent’s grandfather.

## Decision

- The court held the minors’ partial disclaimers did not meet the requirements of a qualified disclaimer under I.R.C. § 2518(b).
- Because the disclaimers were not qualified, the court sustained the Commissioner’s computation of the surviving spouse’s interest and did not allow the estate to increase the marital deduction under I.R.C. § 2056 based on the disclaimers.
- The court sustained the Commissioner’s determination of the credit for tax on prior transfers and denied the estate’s attempt to claim a larger credit under I.R.C. § 2013.

## Legal Principles

- A “qualified disclaimer” under I.R.C. § 2518(b) must be a written, irrevocable, and unqualified refusal to accept an interest, made within the statutory period, before acceptance of the interest or its benefits.
- A key statutory requirement is that, as a result of the disclaimer, the disclaimed interest must pass to someone else “without any direction on the part of the person making the disclaimer.” A planned redirection to obtain tax results can fail this requirement.
- State-court approval of a disclaimer (including a finding that it is in a minor’s best interests) does not control the federal tax outcome; whether a disclaimer is “qualified” is determined under federal statute and regulations.
- If a disclaimer is not qualified, the property is not treated for federal estate-tax purposes as passing directly from the decedent to the eventual recipient through the disclaimer; the marital deduction under § 2056 therefore is not expanded on the theory that the property passed to the spouse by reason of a qualified disclaimer.
- The § 2013 credit for tax on prior transfers is limited by the statute’s conditions and computations and requires proof and calculation consistent with the Code; a taxpayer is not entitled to an increased credit absent meeting those statutory limits.

## Conclusion

In *Estate of Goree*, the Tax Court refused to treat probate-court-approved partial disclaimers executed for minor heirs as qualified disclaimers under § 2518 because the federal requirements were not met, and it therefore sustained the IRS’s limitation of the marital deduction under § 2056 and denied the estate’s effort to increase its § 2013 credit for tax on prior transfers.


Estate of Goree v. Commissioner, 68 T.C.M. 123 (1994)